Housing Bubble

Lennar reports 50 percent increase in Earnings Per Share

June 10, 2003

MIAMI, /PRNewswire-FirstCall/ -- Lennar Corporation, one of the nation's largest homebuilders, today reported earnings for its second quarter ended May 31, 2003. Second quarter net earnings in 2003 were $160.3 million, or $2.05 per share diluted, compared to net earnings of $106.0 million, or $1.37 per share diluted, in the second quarter of 2002. Earnings per share amounts and average shares outstanding for the three and six months ended May 31, 2003 and 2002, have been adjusted to reflect the effect of the Company's April 2003 10% Class B common stock distribution. Revenues in the second quarter increased 35% to $2.1 billion from $1.6 billion in the same period last year.

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, "The U.S. homebuilding market remains very strong as a result of favorable supply and demand trends. Demand remains high due to historically low interest rates, healthy demographic driven demand and improving consumer sentiment. The homebuilding industry's supply of new homes remains historically low due to a continued constrained supply of developable land. Our economic environment has been reinforced with the continuation of a nesting trend in which consumers are traveling less and are willing to invest more and spend more time in their homes."

Mr. Miller concluded, "During the past 18 months we have acquired 11 new homebuilding franchises which have been integrated into the Lennar Family of Builders operations and are enhancing our bottom line performance. Our record earnings are reflective of the success and rapid integration of these acquisitions combined with our strong organic growth program. Based on continuing favorable market conditions and trends, our successful Lennar Process and our record backlog, we are positioned to continue gaining market share and to achieve our increased earnings goals of $8.50 per share in 2003 and $9.50 per share in 2004."

Revenues from sales of homes increased 36% in the second quarter of 2003 to $1.9 billion from $1.4 billion in the same period last year. Revenues were higher due primarily to a 25% increase in the number of home deliveries and an 8% increase in the average sales price. New home deliveries increased to 7,385 homes in the second quarter of 2003 from 5,899 homes in the same period last year. New home deliveries were higher primarily due to continued growth in the California market, combined with the Company's entry into the Illinois market in the second half of 2002. The average sales price on homes delivered increased to $257,000 in the second quarter of 2003 from $237,000 in 2002, primarily due to an increase in the average sales price in some of the Company's markets, combined with changes in product and geographic mix.

Gross margins on home sales were $464.9 million, or 24.5%, in the second quarter of 2003, compared to $335.5 million, or 24.0%, in 2002. Margins were positively impacted by strength in many of the Company's markets, with particular strength in California partially offset by softness in the Texas market.

Selling, general and administrative expenses as a percentage of revenues from home sales were 11.3% in both the second quarter of 2003 and 2002.

Sales of land and other revenues, net, totaled $19.9 million in the second quarter of 2003, compared to $9.2 million in the same period in 2002. Equity in earnings from unconsolidated partnerships was $11.3 million in the second quarter of 2003, compared to $6.7 million in the same period last year. Margins achieved on land sales and equity in earnings from unconsolidated partnerships may vary significantly from period to period depending on the timing of land sales by the Company and unconsolidated partnerships in which it has investments.

Revenues from sales of homes increased 33% in the six months ended May 31, 2003 to $3.3 billion from $2.5 billion in the same period last year. Revenues were higher due primarily to a 22% increase in the number of home deliveries and a 9% increase in the average sales price. New home deliveries increased to 13,027 homes in the six months ended May 31, 2003 from 10,690 homes in the same period last year. New home deliveries were higher primarily due to continued growth in the California market, combined with the Company's entry into the Illinois market in the second half of 2002. The average sales price on homes delivered increased to $256,000 in the six months ended May 31, 2003 from $235,000 in the same period last year, primarily due to an increase in the average sales price in some of the Company's markets, combined with changes in product and geographic mix.

Gross margins on home sales were $807.8 million, or 24.2%, in the six months ended May 31, 2003, compared to $591.9 million, or 23.6%, in 2002. Margins were positively impacted by strength, primarily in the west region, partially offset by softness in the Texas market.

Selling, general and administrative expenses as a percentage of revenues from home sales were 11.6% in both the six months ended May 31, 2003 and 2002.

Sales of land and other revenues, net, totaled $31.2 million in the six months ended May 31, 2003, compared to $13.8 million in the same period in 2002. Equity in earnings from unconsolidated partnerships was $19.9 million in the six months ended May 31, 2003, compared to $12.9 million in the same period last year. Margins achieved on land sales and equity in earnings from unconsolidated partnerships may vary significantly from period to period depending on the timing of land sales by the Company and unconsolidated partnerships in which it has investments.